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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 27, 1997
MATZEL & MUMFORD MORTGAGE FUNDING, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 33-98178 22-3382016
- ---------------------------- ----------------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 Village Court, Hazlet, New Jersey 07730
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(Address of principal executive offices) (Zip Code)
(908) 888-1055
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(Registrant's telephone number, including area code)
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<PAGE>
Item 5. Other Events
Matzel & Mumford at White Oak Estates, L.L.C.
On March 27, 1997, Matzel & Mumford Mortgage Funding, Inc. (the "Funding
Company") made a first mortgage loan to Matzel & Mumford at White Oak Estates,
L.L.C. ("White Oak"), the entity organized to develop, market and build a 58 lot
subdivision known as White Oak Estates located on Old York Road in Branchburg,
Somerset County, New Jersey. White Oak is conveniently located in the Route 287
and 78 corridor near major thoroughfares, and is in commuting distance from
corporate office centers such as Merck Pharmaceuticals, Johnson and Johnson and
AT&T.
As of February 28, 1997, White Oak has written 17 contracts with
prospective homebuyers, and has taken 9 deposits which are expected to be
converted to contracts upon meeting certain conditions. Closings to third party
purchasers are expected to commence in May 1997.
The Funding Company has issued a loan commitment to White Oak in an amount
of $600,000 for a first mortgage on two building lots for construction of spec
homes. White Oak will use a portion of the proceeds to repay First Savings Bank
(first mortgage holder) for its existing acquisition and improvement funding and
Apple Chase Investors, L.L.C. (second mortgage holder for its acquisition
funding). The remaining funds will be used for the construction of the homes as
construction progresses. Repayment of the loan from White Oak to the Funding
Company will come from proceeds of the houses as they are closed with third
party purchasers.
Item 7(a). Financial Statements.
The audited financial statements of Matzel & Mumford at White Oak Estates,
L.L.C. for the years ended December 31, 1996 and period January 17, 1995 (date
of inception) to December 1995 are being filed as part of this Current Report.
Item 7(c). Exhibits.
4(a) Indenture (including form of Notes), dated as of January 25,
1996, between Matzel & Mumford Funding, Inc. (the "Funding
Company") and First Union National Bank, as Trustee
(incorporated by reference to Exhibit 4(a) of Registration
Statement on Form SB-2 of the Funding ompany (registration
No. 33-98178)
4(b) Resolutions of the Board of Directors of the Funding Company
respecting terms of Intermediate Term Secured Notes
(incorporated by reference to Exhibit 4(b) of Quarterly Report
on Form 10-QSB for the quarter ended March 31, 1996 of the
Funding Company.
27. Financial Data Schedule.
<PAGE>
MATZEL & MUMFORD AT
WHITE OAK ESTATES, L.L.C.
FINANCIAL STATEMENTS
Period January 17, 1995 (date of inception)
to December 31, 1995 And The Year Ended December 31, 1996
<PAGE>
MATZEL & MUMFORD AT
WHITE OAK ESTATES, L.L.C.
===============================================================================
FINANCIAL STATEMENTS
PERIOD JANUARY 17, 1995 (DATE OF INCEPTION)
to December 31, 1995 And The Year Ended December 31, 1996
1
<PAGE>
MATZEL & MUMFORD AT WHITE OAK ESTATES, L.L.C.
CONTENTS
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INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS:
Balance sheet 4
Statements of operations and members equity 5
Statements of cash flows 6
Notes to financial statements 7-9
2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Members
Matzel & Mumford at White Oak Estates, L.L.C.
Hazlet, New Jersey
We have audited the accompanying balance sheet of Matzel & Mumford at White Oak
Estates, L.L.C. as of December 31, 1996 and the related statements of operations
and members equity and cash flows for the period January 17, 1995 (date of
inception) to December 31, 1995 and the year ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Matzel & Mumford at White Oak
Estates, L.L.C. as of December 31, 1996 and the results of its operations and
its cash flows for the period January 17, 1995 (date of inception) through
December 31, 1995 and the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
January 9, 1997
3
<PAGE>
MATZEL & MUMFORD AT WHITE OAK ESTATES, L.L.C.
BALANCE SHEET
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December 31, 1996
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ASSETS
Cash $ 19,911
Cash-restricted 161,474
Inventory (Notes 2 and 3) 5,692,181
Notes receivable 79,200
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TOTAL ASSETS $5,952,766
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LIABILITIES AND MEMBERS' EQUITY
Accounts payable $ 633,673
Due to affiliates (Note 4) 829,451
Mortgages payable (Note 3) 4,456,498
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TOTAL LIABILITIES 5,919,622
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MEMBERS' EQUITY 33,144
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TOTAL LIABILITIES AND MEMBERS' EQUITY $5,952,766
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See accompanying notes to financial statements.
4
<PAGE>
MATZEL & MUMFORD AT WHITE OAK ESTATES, L.L.C.
STATEMENTS OF OPERATIONS AND MEMBERS' EQUITY
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For the period
January 17, 1995
YEAR ENDED (date of inception)
DECEMBER 31, to December 31,
1996 1995
- ------------------------------------------------------------------------------
SALES $827,810 $ --
COST OF SALES 749,298 --
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GROSS PROFIT 78,512 --
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MANAGEMENT FEES 28,952 --
OTHER EXPENSE 16,361 --
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NET INCOME FROM OPERATIONS 33,199 --
MEMBERS' DISTRIBUTION 55 --
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MEMBERS' EQUITY, END OF YEAR $ 33,144 $ --
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See accompanying notes to financial statements.
5
<PAGE>
MATZEL & MUMFORD AT WHITE OAK ESTATES, L.L.C.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
============================================================================================
For the period
January 17, 1995
YEAR ENDED (date of inception)
DECEMBER 31, to December 31,
1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 33,199 $ --
Adjustments to reconcile net income to net cash
used in operating activities:
Increase in cash-restricted (55,701) (105,773)
Increase in inventories (2,101,678) (3,590,503)
Increase in notes receivable (79,200) --
Increase in accounts payable and accrued expenses 351,417 282,256
- --------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (1,851,963) (3,414,220)
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgages payable 1,643,498 2,813,000
Distribution to member (55) --
Advances from affiliates 225,959 603,492
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NET CASH PROVIDED BY FINANCING ACTIVITIES 1,869,402 3,416,492
- --------------------------------------------------------------------------------------------
INCREASE IN CASH 17,439 2,472
CASH, BEGINNING OF PERIOD 2,472 --
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CASH, END OF PERIOD $ 19,911 $ 2,472
============================================================================================
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
MATZEL & MUMFORD AT WHITE OAK ESTATES, L.L.C.
NOTES TO FINANCIAL STATEMENTS
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1. SUMMARY OF Nature of Business and Organization
ACCOUNTING POLICIES
Matzel & Mumford at White Oak Estates, L.L.C. ("M&M
at White Oak") is a New Jersey limited liability
company formed on January 17, 1995 for the purpose of
purchasing land in Branchburg, New Jersey and
developing and constructing 58 single-family homes on
the land.
Revenue Recognition
Revenues arising from home sales are recognized under
the accrual method. Under this method, income is
recognized when all terms relating to the sale of a
unit are complete, consideration is exchanged and
title is conveyed to the buyer.
Restricted Cash
Restricted cash represents amounts on deposit as
collateral for project improvements.
Inventories
Inventories are stated at the lower of cost or
estimated net realizable value, which is determined
by reducing the anticipated net sales proceeds by the
estimated costs necessary to complete or improve the
property to the condition used in arriving at the
anticipated selling price.
Inventory costs are comprised of land, project
overhead, direct unit and allocated costs.
Development costs are capitalized until the property
is complete and title has been conveyed to the buyer.
Development costs generally include land and
improvements, house construction, project overhead,
interest and a portion of construction management
fees. Interest capitalized is based upon the interest
rate on specifically related debt. A portion of the
management fees to a related party are paid and
capitalized by the Company.
Income Taxes
The Company is organized and operates as a limited
liability company which is not subject to Federal or
state income taxes. Accordingly, no provision for
income taxes has been made. The earnings or losses of
the Company are included on each member's tax return,
according to the terms of the operating agreement.
7
<PAGE>
MATZEL & MUMFORD AT WHITE OAK ESTATES, L.L.C.
NOTES TO FINANCIAL STATEMENTS
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Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements
and the reported amounts of revenues and expenses
during the reporting period. Actual results could
differ from those estimates.
2. INVENTORIES Inventories relating to the development of
single-family homes consist of the following at
December 31, 1996:
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Land and land improvements $4,411,962
Project overhead 344,630
Sales and marketing 160,338
Financing 775,251
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$5,692,181
=============================================================
All expenses incurred for the development of the
project are capitalized. Selling expenses, which do
not benefit future periods, and general and
administrative expenses are treated as period costs
and are expensed as incurred.
3. LOANS AND
MORTGAGES PAYABLE
1996 1995
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Land and construction loan (a) $1,500,000 $1,500,000
2nd mortgage (b) 1,443,498 --
3rd mortgage (c) 1,313,000 1,313,000
Note payable (d) 200,000 --
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$4,456,498 $2,813,000
=============================================================
8
<PAGE>
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MATZEL & MUMFORD AT WHITE OAK ESTATES, L.L.C.
NOTES TO FINANCIAL STATEMENTS
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(a) The Company has a loan from a bank for land
acquisition and construction not to exceed
$1,500,000. Interest is payable monthly at
1 1/2% over prime. The loan matures on September
27, 1997 after which time the principal is due
on demand. The loan is collateralized by a first
mortgage on the land and improvements of the
project and is guaranteed by the managing
members.
(b) The Company has a commitment from a bank for
land acquisition and construction not to exceed
$4,520,000. Interest is payable monthly at the
prime rate, plus 1 1/2%. Principal is payable
with each closing at the rate of 120% of the
amount advanced for land acquisition and 100% of
construction advances. The loan matures on March
31, 1998, with the availability of a six month
extension at the option of the lender after
which time the balance will be due on demand.
The loan is collateralized by a second mortgage
on the land and improvements of the project and
is guaranteed by the managing members of M&M at
White Oak and MMO.
(c) The Company has a mortgage in the amount of
$1,313,000. Interest is payable monthly at 15%,
plus an additional 1% of the sales price of each
lot closed between March 20, 1996 and September
20, 1997 and 1 1/2% thereafter. Principal is
payable $10,000 per lot for the 5th through 7th
lots closed, $31,000 for the 8th through 23rd
lots, $35,000 for the 24th through 50th lots and
$31,000 for the 51st lot closed. The note is
collateralized by a third mortgage and the
guarantee of M&M at White Oak.
(d) The Company has notes payable in the amount of
$200,000 bearing interest at 25%. Interest is
payable semi-annually and principal is payable
upon demand with 90 days notice. The note is
guaranteed by the managing members of M&M at
White Oak.
4. RELATED PARTY The Company has an agreement with the Matzel &
TRANSACTIONS Mumford Organization, Inc. ("MMO"), whereby MMO
provides construction management services at a fee
of 4% of the gross selling price of each house. MMO
is entitled to draws of $30,000 per month.
Included in due to/from affiliates are transfers of
costs incurred by affiliated companies of the
managing member of the Company. The amounts are short
term in nature and bear no interest. The amounts are
to be repaid as cash flow allows.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
MATZEL & MUMFORD MORTGAGE FUNDING, INC.
By: /s/ ROGER MUMFORD
-----------------------------------
Roger Mumford
President
Dated: March 27, 1997
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Document Page
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 181,385
<SECURITIES> 0
<RECEIVABLES> 79,200
<ALLOWANCES> 0
<INVENTORY> 5,692,181
<CURRENT-ASSETS> 5,952,766
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,952,766
<CURRENT-LIABILITIES> 5,919,622
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (0)
<TOTAL-LIABILITY-AND-EQUITY> 33,144
<SALES> 5,952,766
<TOTAL-REVENUES> 827,810
<CGS> 827,810
<TOTAL-COSTS> 749,298
<OTHER-EXPENSES> 749,298
<LOSS-PROVISION> 45,313
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 33,199
<INCOME-CONTINUING> 0
<DISCONTINUED> 33,199
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,199
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
